Supervisor: Professor Mariana Tavares
Co-Supervisor: Professor Barack D. Richman
Master of Transnational Law
Dissertation by Maria Barros Silva
2 Index
List of key words _______________________________________________________3
1- Introduction _________________________________________________________4
2- Private enforcement and punitive damages: overview_________________________7
3- The American regime_________________________________________________13
3.1. Brief historical background_____________________________________13
3.2. The current American legal regime regarding punitive damages________16
4- The European regime_________________________________________________20
4.1. Brief historical background_____________________________________20
o 4.1.1. Development of private enforcement and background to the
Damages Directive_________________________________________20
4.2. Examples of some Member States’ regimes________________________25
4.3. The Damages Directive’s approach ______________________________29
5- Critical assessment of both systems’ methods to provide victims with sufficient incentives to claim damages______________________________________________36
6- Conclusion _________________________________________________________42 7- Bibliography________________________________________________________45 Articles ________________________________________________________45 Books _________________________________________________________59 Journals________________________________________________________60 Websites _______________________________________________________61 Jurisprudence ___________________________________________________62 Legislation _____________________________________________________65
3 List of key words
Antitrust Compensation Competition law Damages Directive Damages multipliers Directive 2014/104/EU European Union Harmonization Incentives to sue
Member States’ regimes United States of America
Private enforcement Public enforcement Punitive damages Treble damages Right to damages Overcompensation
4 1- Introduction
Private enforcement has been slowly developing in Europe at a different pace amongst
Member States. But, with the new Damages Directive1, it seems like it will become
more cohesive and find its spot alongside the extremely developed US’s private
enforcement, where an astounding 95% of antitrust cases are made of private actions2.
With this dissertation I attempt to analyze if introducing damages multipliers, such as punitive damages, in the European private enforcement system, much like they exist in
the US3, is something that should be considered.
Enhancing damages can comprise, for example, double or treble damages, which multiply the actual monetary damages suffered by the plaintiffs, punishing the perpetrators and acting as a strong deterrence factor. There are actually many forms of punitive or exemplary damages, the most famous of which are perhaps the “American” treble damages. But in reality, punitive damages are all damages intended to punish the defendant, thus exceeding what is necessary for simple compensation of the plaintiff. These damage multipliers can be distinguished in: punitive damages, which can be awarded separately and exceed the actual harm, since the calculation is independent from it; or statutory damages, which are a specific sum awarded either in alternative or in addition to actual damages.
Punitive damages are one part of private enforcement that I believe is essential to provide sufficient incentives for victims of competition infringements to sue, thus achieving compensation for victims and deterrence purposes. And the reason for that is that only the victims with the highest amount of damages feel that it’s worth it to go to court, given the prospect of having to pay high costs in lawyers, economists and court fees, with uncertain results.
Even so, the Damages Directive’s legislators chose to clearly prohibit any form of overcompensation and punitive damages, even though that isn’t against EU law. In fact,
1 Directive 2014/104/EU on certain rules governing actions for damages under national laws for
infringements of the competition law provisions of the Member States and of the European Union, of 26
November 2014
2 Wouter P.J. Wils, Private enforcement of EU antitrust law and its relationship with public enforcement:
past, present and future, pp. 14-16
5
this prohibition is an approach which contradicts the one adopted in the Manfredi case4,
which will be approached. The Directive’s prohibition also differs from the Green
Paper’s approach5, which proposed that for cartel damages, compensation could be doubled (automatically, conditionally or at the discretion of the court), if single damages were not sufficient to incentivize victims to bring damages actions. This option
followed the US approach to punitive damages, but was later abandoned.6 Thus, the
Directive´s prohibition of punitive damages was undeniably a political choice, led by
the fact that many Member States’ regimes are against them. This leads to the problem of European private enforcement’s capacity to provide incentives for all victims that should be compensated.
I will briefly analyze the European and the American systems, focusing on the subject of punitive damages. This comparison will lead to the understanding of the contested value and necessity of damages multipliers and if its implementation could be useful in Europe.
I will begin, after the introduction in chapter 1, by providing the necessary background knowledge on the topics of the dissertation, in chapter 2. I will start with a general overview of the meaning of private enforcement and its complementarity with public enforcement, notwithstanding the different purposes they serve. It will also be explained how these different purposes reflect themselves in punitive damages and the fact that the American system allows them, whereas the European system does not.
In chapter 3, I will specifically approach the American legal regime, starting by providing a brief historical background, in section 3.1. Afterwards, in section 3.2, the focal point will be on the current American legal regime, concentrating on the specific roles of private vs public enforcement and the key part that punitive damages play in that country’s private enforcement.
In comparison, chapter 4 will focus on the European regime. A concise historical background will be exposed in section 4.1, where the development of private
4 Judgment of 13 July 2006, Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA, C-295/04, Antonio
Cannito v Fondiaria Sai SpA, C-296/04, Nicolò Tricarico v Assitalia SpA, C-297/04 and Pasqualina Murgolo, C-298/04 v Assitalia SpA, EU:C:2006:461
5Green Paper- Damages actions for breach of the EC antitrust rules, (SEC(2005) 1732, /*COM/2005/0672*/, of 19 December 2005
6 Zegrean, Ivona-Elena, Consumer welfare and private actions for damages in European Union
6 enforcement and the background to the Damages Directive will also be explained, in section 4.1.1. Brief mention will be made to important case-law and legislation that led the way to the Directive. Furthermore, section 4.2 will give practical examples of some Member States’ regimes prior to the Directive, highlighting some countries where private enforcement has a considerable tradition and punitive damages are actually accepted, although that is not the case for most Member States. Finally, section 4.3 will critically consider the Damages Directive framework, in the sense that it does provide some alternative options to punitive damages, but they might not be enough.
The core part of the dissertation will be finished in chapter 5, with a critical assessment of both systems and the value of punitive damages. The background questions here are: are punitive damages essential or are the other methods to provide incentives for victims to sue efficient enough?
Lastly, the conclusion in chapter 6 will try to reach an outcome regarding the necessity of punitive damages in Europe and whether or not they are a prerequisite of an efficient private enforcement system.
7 2- Private enforcement and punitive damages: overview
Competition law enforcement can be public or private. They both have, in general, the same purposes: to bring the infringement to an end; to compensate; and to punish the infringer and deter him (specific deterrence) and others (general deterrence-
socialization of the harm and damage) in the future.7 The difference lies in the
importance of each purpose. For instance, private enforcement focuses more on the deterrence and compensation aspects, as it allows damages to be awarded to private plaintiffs for damages suffered from competition infringements; whereas public enforcement’s main goal is to bring the infringement to an end. It also helps to clarify and develop legislative prohibitions. If punitive damages are accepted in private enforcement, then the punishment purpose is exacerbated.
Regarding the relationship between public and private enforcement, in my opinion, the most sensible approach is that they should complement each other, independently of their weight in the society, so as to avoid any conflict or overlap between them, as each
has inextricably interrelated goals that can work for the same purposes.8
Private enforcement can indeed bring about many positive things. Firstly, it’s the main way of compensating victims for their suffered losses. It allows for a multiplication of resources and a kind of “safety net” in case there is subversion of the public system, thus reducing the need of state intervention (namely in stand-alone actions), and also reducing the costs of the governmental budget, allocating costs to the private sector.
Moreover, private information is sometimes the best placed to detect violations.9 As
Myriam E. Gilles wrote, "(…) the massive governmental expenditures required to detect
and investigate misconduct are no match for the millions of 'eyes on the ground' that bear witness to (…) violations.” 10
7 Assimakis, Komninos, Private antitrust damages actions in the EU: second generation questions, in
Revista de Concorrência e Regulação, number 9, January to March 2012, pp. 21-72
8 Buccirossi, Paolo, Carpagnano, Michele, Is it time for the European Union to legislate in the field of
collective redress in antitrust (and how)?, Journal of European Competition Law & Practice 2013; 4 (1):
3-15, p.13
9 Burbank, Stephen B., Farhang, Sean & Kritzer, Herbert M., Private enforcement, pp. 662-666 10E. Gilles, Myriam, Reinventing structural reform litigation: deputizing private citizens in the
8 Furthermore, private enforcement encourages legal and policy innovation and participatory and democratic governance, through the creation of a culture of
competition that can have an overall positive macroeconomic impact.11
Nonetheless, some drawbacks to private enforcement cannot be ignored.
Firstly, some scholars fear that private enforcement can reduce public enforcement’s efficiency, which is dependent, in many cases, on leniency agreements. It is a fact that whistleblowers provide key information to competition authorities, which allows them to prosecute many cases. The biggest advantage for whistleblowers is that they are, many times, not required to pay any penalty (or see their penalty considerably reduced). However, if after these public charges, companies have to deal with private damages (and even more so if there are multiple damages), the incentives for whistleblowers are reduced. This is, indeed, a complicated issue and something that requires a lot of balance. Completely deny victims their compensation just because the infringing company used leniency is not fair for them; but making companies pay makes it less worth it for them to use leniency. The best solution, in my opinion, is to get inspiration from the American de-trebling mechanism, and allow for reduced private enforcement liability in case of leniency agreements. In fact, the Directive already does that to some
extent, in its 38th presumption. Immunity recipients are excluded from joint and several
liability, thus they are only liable for the harm they caused.
Furthermore, another issue is that follow-on actions are the most common type of actions, due to the fact that private parties don’t have the investigative powers necessary to uncover cartels, so competition authorities usually still have to bring an action first. Moreover, in stand-alone proceedings, i.e., suits initiated independently of a public investigation, which require a separate determination of liability, the burden of proof usually rests on the plaintiff and, even in follow-on actions, the plaintiff has to show its
individual loss and the direct causal link12 between the infringement and the loss
incurred, with little access to evidence.
11 Migani, Caterina, Directive 2014/104/EU: in search of a balance between the protection of leniency
corporate statements and an effective private competition law enforcement, Global Antitrust Review
2014, p. 92
12 See e.g. Judgment of 5 March 1996, Brasserie du Pêcheur SA v Bundesrepublik Deutschland and The
Queen v Secretary of State for Transport, ex parte: Factortame Ltd and others, Joined Cases C-46 &
48/93, EU:C:1996:79, paragraph 51; and Judgment of 9 June 2010, European Commission v Schneider
9 In addition, some scholars fear the possibility of an abusive litigation culture. Regimes where private enforcement has a predominant role can end up excessively empowering judges, who many times lack policy and competition law expertise, thus potentially resulting in inconsistent and contradictory jurisprudence. The Administration should be the entity responsible for policy making, but private enforcement can change this separation of powers to some extent.
It can also be argued that private enforcement discourages cooperation with regulators and voluntary compliance and lacks democratic legitimacy and accountability, in the sense that, unlike administrators, who do not have personal economic interests at stake, private litigants act precisely based on these interests that may be in conflict with the public interest and regulatory regime.
Furthermore, private litigation is fragmented and uncoordinated and for it to be efficient adequate incentives need to exist, otherwise there will be under-enforcement. Incentives can be: admissibility of class actions, contingency (percentage-based) fees, or the use of damages multipliers, such as punitive damages.
In the EU, article 2(3) and recital 12 of the Damages Directive, albeit with no legal ground from the Treaties, prohibit victims’ overcompensation, thus limiting the ability
of EU Member States to provide for any kind of multiple damages.13 This is a clear
rejection of the US’s approach, where the award of treble damages is the central feature of private antitrust enforcement.
The Damages Directive implies that full compensation, i.e. the restoration of the harm suffered by the victims, is limited by the fact that damages can only serve compensation rather than deterrence purposes, excluding all punitive reasons. Simple damages that aim to compensate victims strictly for the losses they suffered are considered sufficient to provide incentives for victims to sue and achieve compensation. In case the parties have contractually agreed upon a fixed amount of compensation, and that leads to overcompensation, the amount must be officially reduced.
Deterrence is not the main concern in Europe, where this goal is sacrificed for the sake of just compensation. Public enforcement remains centered in the European Commission and the national competition authorities (cooperating in the European
10 Competition Network), whereas private actions for damages simply have a
supplementary and compensatory role.14 In fact, the European Commission and the
competition authorities of the EU Member States have a large capacity to deter and
punish infringements of articles 101 and 102 TFEU15 by imposing high fines (up to
10% of the yearly revenue of a company).
On the contrary, in the US, the introduction of damages multipliers is considered to serve corrective justice and, primarily, deterrence purposes, providing possible offenders with incentives to avoid harm.
The strict prohibition of overcompensation is a missed opportunity, because punitive damages could be very useful. On the one hand, using a damages multiplier such as trebling, like in the US, is indeed a very efficient tool to induce victims to seek reimbursement for the damages they suffered, as the perspective of being overcompensated acts as bait and makes the expected benefits exceed the expenses of going to court. On the other hand, the fact that more victims actively seek compensation, leads enterprises to take into account this very high extra potential cost when they infringe competition laws, creating a very significant deterrence effect.
All these “bounty” options are very effective in enhancing incentives for individuals to litigate, acting as “private attorney generals”, but they are not without some controversy.16
Firstly, punitive damages always need to be subject to effective limits, and should not be used in all civil cases, or at least without adequate constitutional procedural safeguards. In fact, punishment is not a purpose of private law, so this can be considered against the separation of criminal and private law.
Punitive damages are also dangerous in the sense that there is a risk of unfair
application and over deterrence.17 Furthermore, if there is a long prejudgment interest,
it’s difficult to add punitive damages to the damages award without leading to extreme overcompensation and to a disproportionate burden on the infringing enterprises. In particular, in non-cartel cases, especially if contingency fees are available, enhancing
14 Wouter P.J. Wils, Private enforcement of EU antitrust law and its relationship with public
enforcement: past, present and future, p. 39
15 Treaty on the Functioning of the European Union, of 13 December 2007
16 Burbank, Stephen B., Farhang, Sean & Kritzer, Herbert M., Private enforcement, pp. 667-678
11 the expected reward through punitive damages is not necessary and can indeed lead to excessive overcompensation and frivolous suits.
Another problem is the potential for abuse, as there might “(…) not be the consumers
who have been harmed by an antitrust infringement who bring claims but competitors (who have more information), whose incentive to sue varies directly with the competitive threat posed by the defendant.” 18 This completely overturns the system and leaves a huge burden on the defendants.
Furthermore, it’s not clear whether punitive damages, with its strong penal sanction connotation, entail a punishment for the full scope of the wrong to society or just the wrong done to the plaintiff. If the first option is the purpose of punitive damages, it’s illogical to require a proportional balance between the amount of punitive damages and the amount of the individual plaintiffs’ damages award. Actually, they are usually not dependent on each other, although in some legal systems, a ratio between compensation
and punitive damages may exist. 19
It could also be argued that it does not make sense to allow the plaintiff to keep the
punitive damages award, as the harm was done to all the society.20 The counterargument
is that the plaintiff suffered a loss, which needs to be compensated and punitive damages are sometimes the only solution available.
Moreover, there is no reason to assume that trebling, like in the US, is the right multiplication number. It’s an attempt to incorporate the probability of detection and punishment into the final damage award, as single damages are clearly insufficient. As we have seen, the social benefit (in terms of deterrence, education and clarification of the law) of a damages action far exceeds the damages awarded to private plaintiffs, who, in turn, have insufficient incentives to sue. But why does the American regime use 3 as the multiplier? If we think about it, trebling, which means awarding the plaintiff three times the amount of damages actually suffered, is an inaccurate indiscriminate measure, and while it does increase the incentives to pursue meritorious
18 Milutinović, Veljko, The antitrust damages directive: the ideal of just compensation and the primacy of
public enforcement, CPI Antitrust Chronicle, January 2015, p. 768
19 Milutinović, Veljko, The antitrust damages directive: the ideal of just compensation and the primacy of
public enforcement, CPI Antitrust Chronicle, January 2015, p. 764
12
cases, it can also increase unmeritorious ones.21 Hence, why is the multiplier not
variable? The obvious answer is that it would certainly be too casuistic and a nightmare to judges, but the reality is variable too.
Partly due to all these reasons, with a few exceptions, such as the United Kingdom and the Netherlands, for example, few of these mechanisms are sufficiently developed in the
EU22. With lack of incentives, asymmetry of information, high costs and risks in
litigation, due to the need of complex economic analysis and lack of experience from national judges, it’s difficult to make private enforcement thrive in Europe. Even with the new Damages Directive it’s not clear whether much will change, as access to
overcompensation is still denied.23 Legal uncertainty and disparity between national
legislations in the EU will most likely at least partially remain, as the Damages
Directive, even if it is indeed a step in the right direction, still leaves leeway for a lot of
differences in its transposition. The negative outcomes could be ineffective private enforcement and avoidance, conflicts in the interaction between private and public enforcement, unequal access to justice and a deficit in compensatory justice, as the differences between Member States’ transpositions lead to forum shopping, which albeit at least allowing overcompensation in some countries, leads to an unequal treatment of
victims.24
Notwithstanding, in general, albeit belatedly, private enforcement has been steadily growing in Europe, propped by the emergence of funding sources, such as Cartel Damages Claims (“CDC”); the establishment of American law firms in Europe; an increasingly vigorous antitrust enforcement activity; better acknowledgement of the
possibility of pursuing private enforcement; and legislative reforms, both on a national25
and European level, with the Damages Directive.26
21 Wils, Wouter P. J., Should private antitrust enforcement be encouraged in Europe?, March 28, 2003,
World Competition: Law and Economics Review, Vol. 26, No. 3, 2003., pp. 13-14
22 European Union
23 Migani, Caterina, Directive 2014/104/EU: in search of a balance between the protection of leniency
corporate statements and an effective private competition law enforcement, Global Antitrust Review
2014, pp. 88-107
24 Howard, Anneli, Too little, too late? The European Commission's legislative proposals on anti-trust
damages actions, Journal of European Competition Law & Practice 2013, 4 (6): 455-464, p. 456
25 Such as the United Kingdom’s Consumer Rights Act of 2015
13 3- The American regime
3.1. Brief historical background
In general, antitrust law in the US emerged with the Sherman Act of 189027. It was the
first federal law to outlaw competition practices that are harmful for consumers, such as monopolies, cartels and trusts.
In 1914, the Congress passed two additional antitrust laws: the Federal Trade
Commission Act28, which created the Federal Trade Commission; and the Clayton Act29. The Clayton Act addressed specific practices that the Sherman Act did not clearly prohibit, and its presumptions have been interpreted by the US courts, particularly the Supreme Court.
Albeit revised, these are the three core federal antitrust laws that still apply nowadays. In addition to these federal statutes, most States have state antitrust laws. Nevertheless, the majority of private cases are brought under federal laws. Most antitrust violations are persecuted in civil actions, but the Sherman Act is also a criminal law, so individuals and businesses that violate it may be prosecuted by the Department of Justice and punished with fines and imprisonment (although imprisonment is generally limited to intentional and clear violations).
Punitive damages had first been recognized in England in the 1623 Statute of
Monopolies30, based on the Darcy v. Allein case31, known as the case of the monopolies.
Darcy v. Allein concerned a license to import and export playing cards, given by the
Queen, and was the first judgment that considered state-established monopolies to be harmful and against the law. Darcy, an officer of the Queen's household, claimed damages for the defendant's infringement.
The English common law tradition was transposed to the UK’s colonies, namely the
US32, where additional case law followed and punitive damages ended up becoming
part of the American private enforcement system.
27 Sherman Act, 26 Stat. 209, 15 U.S.C. §§ 1–7, of 2 July 1890
28 Federal Trade Commission Act of 1914
29 Clayton Antitrust Act of 1914, Pub.L. 63–212, 38 Stat. 730, of 15 October 1914 30 English Statute of Monopolies, of 1623
31 Judgment of 1 January 1599, Edward Darcy Esquire v Thomas Allein of London Haberdasher (1602)
32 Milutinović, Veljko, The antitrust damages directive: the ideal of just compensation and the primacy of
14 The first relevant American private follow-on suit happened after the public prosecution
of a price fixing cartel of electrical equipment manufacturers in the late 1950s.33 A
decade later, there was an increase in private enforcement actions under American federal law, due to: the enactment of federal statutes that authorized private enforcement; changes in the legal profession; and, most importantly, the proliferation of financing means, such as state-funded legal services’ programs, the growth of private nonprofit advocacy organizations (with favorable tax treatment), contingency fees, statutory attorney fee shifting presumptions favorable to prevailing plaintiffs, and the
possibility of class actions.34
Later on, and until 1974, even when criminal enforcement by the Department of Justice was much more developed, fines were limited to $50,000, leaving a deterrence gap to be filled by follow-on treble damages actions. Nowadays, the penalties’ maximum limit has been increased up to $100,000,000 for corporate fines, $1,000,000 for individual
fines and 10 years of jail term. 35 But even that is still not high enough. According to
Wouter P.J. Wils: “Still today, while the Department of Justice has statutory authority
to prosecute all violations of sections 1 and 2 of the Sherman Act criminally, the scope of criminal enforcement has in fact been narrowed over time to ‘hard-core’ price-fixing, bid rigging or market allocation cartels. For other antitrust violations, US public enforcement is in practice limited to prospective injunctive relief, leaving a deterrence gap to be filled by follow-on treble damages actions.” 36
In 1989, the Supreme Court considered, for the first time, the constitutionality of
punitive damages, in Browning-Ferris v. Kelco37. Browning-Ferris, faced with paying
$51,146 in compensatory damages and $6 million in punitive damages, appealed, based on allegedly excessive fines that violated the Eight Amendment of the Constitution. However, it didn’t raise this issue specifically under the Due Process Clause of the Fourteenth Amendment. Thus, the U.S. Supreme Court did not consider the effect of
33 Rüggeberg, Jakob and Schinkel, Maarten Pieter, Consolidating antitrust damages in Europe: a
proposal for standing in line with efficient private enforcement, World Competition 29(3): 395-420, 2006,
p. 399
34 Burbank, Stephen B., Farhang, Sean & Kritzer, Herbert M., Private enforcement, p. 647
35 Antitrust criminal penalty enhancement and reform act of 2004, Pub. L. No. 108-237, §215, 118 Stat. 665, 666
36 Wouter P.J. Wils, Private enforcement of EU antitrust law and its relationship with public
enforcement: past, present and future, p. 16
15 due process on the award, but it stated that “(…) on the basis of the history and purpose
of the Eighth Amendment, that its Excessive Fines Clause does not apply to awards of punitive damages in cases between private parties.” 38, where the government has no share in the recovery. And even if the Amendment was applicable, the punitive damages awarded were not so disproportionate as to be constitutionally excessive.
From then on, punitive damages became widely accepted.3940
38 BFI, Inc. v. Kelco Disposal, Inc., 492 U.S. 257 (1989), P. 492 U. S. 261
39 Subsequent relevant case law includes: Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1 (1991); TXO
Production Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993); Honda Motor Co. v. Oberg, 512
U.S. 415 (1994); BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996); Cooper Industries, Inc. v.
Leatherman Tool Group, Inc., 532 U.S. 424 (2001); State Farm Mut. Automobile Ins. Co. v. Campbell,
538 U.S. 408 (2003); Philip Morris USA v. Williams, 549 U.S. 346 (2007) 40 https://verdict.justia.com/2013/04/08/the-constitution-and-punitive-damages
16
3.2. The current American legal regime regarding punitive damages
Currently, in the US, the public competition law sector is headed by public entities41
that have relatively limited resources42 and fewer enforcement rights than competition
authorities in Europe. Namely, they have no power to impose fines and have to regulate through litigation in court, in order to impose criminal or civil law sanctions.
That is not to say public enforcement is not relevant, particularly in the field of immunities and criminal sanctions, such as imprisonments and fines, which are
available in the US, but not for private enforcement.43 Moreover, undertakings that
cooperate with the authorities can receive immunity from criminal sanctions, see their civil liability reduced from treble to single damages (“de-trebling”) and only be liable
for the damage caused by their own actions.44
Still, American private plaintiffs have a much stronger legal position than their
European peers and are relied upon as “private prosecutors”45. In fact, private suits,
with the possibility of damages overcompensation resulting thereof, provide a significant supplement to public antitrust enforcement in the US. Private enforcement and actions for damages are very well established.
Some other factors that induce this supremacy of private enforcement include the fact that: there are jury trials, broad pre-trial discovery, an asymmetric loser-pays rule (only in favor of the plaintiff), and an aggressive litigation culture.
Particularly regarding punitive damages, article §4 of the Clayton Act states that claimants can be awarded threefold the damages they suffered (treble damages), if they were injured by “(…) reason of anything forbidden in the antitrust laws”. The plaintiff
41 The Department of Justice, which comprises an Antitrust Division; and the Federal Trade Commission,
created by the Congress
42 Noronha, João Espírito Santo, Litigância jurídico-privada no direito da concorrência- a diretiva
nº2014/104/UE de 26 de novembro de 2014: divulgação de elementos de prova, efeitos das decisões nacionais, prazos de prescrição e resp. solidária, in Revista de Concorrência e Regulação, number 19,
pp. 53-82, July to September 2014
43 Canenbley, Cornelis, Steinvorth, Till, Effective enforcement of competition law: is there a solution to
the conflict between leniency programmes and private damages actions?, Journal of European
Competition Law & Practice 2011, 2 (4): 315-326, p. 323
44 Antitrust criminal penalty enhancement and reform act of 2004, Pub. L. No. 108-237, §213, 118 Stat. 665, 666
45 Canenbley, Cornelis, Steinvorth, Till, Effective enforcement of competition law: is there a solution to
the conflict between leniency programmes and private damages actions?, Journal of European
17 simply must prove that the defendant committed a violation of antitrust law, which resulted in damage to him. There is an antitrust injury requirement, developed by the US Supreme Court, under which the plaintiff has to show that the injury flows from the defendant's unlawful act, so a prima facie existence of a causal link.
For example, in Zenith Radio Corp. v. Hazeltine Research, Inc.46, concerning patent
infringements and license agreements, upon the expiration of Zenith's license agreement with Hazeltine Research, Inc., Zenith refused to renew it, asserting that it no longer required a license. Hazeltine brought a patent infringement suit, whereas Zenith counterclaimed for damages and injunctive relief, alleging Sherman Act violations by misuse of patents and conspiracy, and ended up being awarded around $35,000,000 in
treble damages, together with injunctive relief.47
Later, in the case Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.48, regarding bowling
alleys, one manufacturer, Brunswick Corp, acquired several defaulted bowling centers, but only operated some. Pueblo Bowl-O-Mat, a competitor, sued for treble damages for loss of profits under the Clayton Act, arguing that these acquisitions might lessen competition or create a monopoly. Pueblo obtained a jury verdict of over $7 million dollars in damages, but Brunswick appealed to the Court of Appeals, which remanded back to the trial court, based on an error in charging the jury. Brunswick and Pueblo both petitioned the United States Supreme Court for review, which rejected the Clayton
Act claim for lack of antitrust injury, based on the fact that Pueblo was harmed by the
acquisition, but this actually increased competition, as the bowling alleys would have
gone out of business, so there was no antitrust injury.49
All things considered, punitive damages in the US serve four interrelated goals: compensation for victims; and loss of illicit gains, punishment and deterrence (by far,
the most important) for the infringers.50 This is demonstrated by the fact that the amount
of damages that the infringing party must pay can be much higher than the actual harm
46 Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 100 (1969) 47 https://supreme.justia.com/cases/federal/us/395/100/case.html
48 Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 US 477 (1997)
49 https://supreme.justia.com/cases/federal/us/429/477/case.html 50 Fabbio, Philipp, Private actions for damages, p. 6
18
suffered by the plaintiff, making him more than whole.51 In fact, the final amount of
compensation can comprise treble damages, plus judicial costs and reasonable lawyer fees and sometimes even interest. If interest is considered, this may constitute a significant increase in the amount of damages awarded, given that there is often a long delay before the judgement or the settlement. In addition, damages can potentially coexist with claims by direct and indirect purchasers and even with civil and criminal fines (“cluster bomb effect”), although that is not the norm in the US.
In the US, there are also "piggy-back" private treble damages actions, based on the presumption that issues that have already been decided in a civil or criminal judgment in favor of the Government don’t need to be litigated again by private parties. Thus, they can rely upon these judgments, which facilitate proof and reduce costs and time.
All these incentives are actually necessary to protect private enforcement in this country, as the litigation system is very developed and plaintiff-friendly, but at the cost
of extremely high fees and long procedures.52
Despite all its good intentions and results, a real problem with the American regime is that there is a risk that several claims for damages may overlap, resulting in an overloading of compensation for victims. There can also be too many incentives for the private parties to claim damages, leading to an excessive flow of unmeritorious cases. Injured competitor companies, for instance, often bring these types of suits. Such an overflow of cases might be good for greedy lawyers and economists, but it ends up putting too much pressure on the judicial system and brings on a huge expense to the economy, as it can chill vigorous competition, if companies start fearing being unfairly sued by their competitors.
Yet another issue lies with the excessive amount of settlements, namely in class actions,
where often defendants feel pressured to settle, instead of risking going to court.53
51 Hazelhorst, Monique, Private enforcement of EU competition law: why punitive damages are a step too
far, European Review of Private Law 4-2010 [757-772], pp. 761-766
52 Dunne, Niamh, The role of private enforcement within EU competition law, p. 5
53 Mircea, Valentin, The private enforcement of the competition rules in the European Union – a new
19 Notwithstanding the possibility of excessive overcompensation, the American system has some limits that help prevent it to some extent. For example, generally, interest is not considered in the final amount of damages, which ends up undermining the value of treble damages, in the end making them more like “single damages”, thus closer to the damage that the plaintiff actually suffered. In essence, the American private enforcement system, which heavily relies on punitive damages, has indeed many advantages for private plaintiffs, but disregards some important issues that the European legislator kept in mind while drafting the Damages Directive, and will now be approached.
20 4- The European regime
4.1. Brief historical background
4.1.1. Development of private enforcement and background to the Damages
Directive
In the EU, competition law is enforced by the European Commission, the national competition authorities and national courts.
Enforcement of competition law entails many alternative remedies available, from
contractual remedies, like restitution, to fines and even penal sanctions54. Despite
having the same goal of compensating parties, restitution and damages actions have very different purposes. In fact, contractual and restitutionary damages can simultaneously prevent unjust enrichment and trigger compliance with competition
rules, but there is no flexibility: the restitution is either granted or not. 55 These remedies
are: nullity, which is automatic; and voidness, which has retroactive effects and is absolute, that is, it does not require confirmation and has erga omnes effects. But these are defensive instruments, so not enough to compensate victims of exploitative or exclusionary practices by cartels or dominant firms.
Public enforcement is, without a doubt, the most important instrument in the EU, as it can be used following a public authority’s own initiative or following a private complaint. Notwithstanding, there has been a constant attempt to make private enforcement develop more, since it can indeed be a very helpful tool to improve consumer welfare.
Private enforcement is grounded in the direct effect of articles 101 and 102 TFEU and the principle of adequate protection of EU law rights. Other key principles are the
principle of effectiveness56 and the principle of equivalence, which establish thresholds
for legal protection.57
54 Giò, Alessandro Di, Contract and restitution law and the private enforcement of EC competition law, p. 203
55 Giò, Alessandro Di, Contract and restitution law and the private enforcement of EC competition law, pp. 203-209
56 Enshrined in article 19(1) TEU
57 Hjelmeng, Erling, Competition law remedies: striving for coherence or finding new ways?, Common
21 In the past, the role of the EU in the development of private enforcement was quite
limited. The principles of subsidiarity58 and procedural autonomy59 were utterly
respected. As the EU’s competences became stronger, so did the principle of procedural autonomy have an increasingly more limited interpretation, by virtue of secondary EU legislation. Damages actions were first mentioned in a European context in Regulation
17/6260, which was the first EU competition enforcement regulation61. But it was actually the case law of the Court of Justice of the European Union that truly triggered
the development of private enforcement, namely in the Bosch62 and BRT63 judgments,
where articles 101(1) and 102 TFEU were recognized as directly applicable. In 2001,
the Courage judgment64 revolutionized damages actions, by stating that it must be
“(…) open to any individual to claim damages for loss caused to him by a contract or by conduct liable to restrict or distort competition.” 65 The European Court of Justice finally recognized the individual right to damages due to the violation of articles 101 and 102 TFEU, which have direct effect and entail full compensation for victims for the harm they suffered. Moreover, damages claims were seen as means to ensure the full effectiveness of article 101 TFEU, thus strengthening effective competition and judicial protection. 66
Regarding procedural issues of private enforcement, that was considered to be the responsibility of national courts, with the limit of the abovementioned principles of
equivalence and effectiveness.67 In 2006, in the extremely important Manfredi
58 Article 5(3) TEU 59 Article 4(2) TEU
60 Regulation No 17: First Regulation implementing Articles 85 and 86 of the Treaty, of 21 February 1962 61 A Report on civil claims in the Member States was released in 1966; a Notice on cooperation with
national courts in 1993; and a White Paper on modernization in 1999, which referred to the possibility of
national courts granting damages to victims of competition law
62 Judgment of 6 April 1962, Kledingverkoopbedrijf de Geus en Uitdenbogerd v Robert Bosch GmbH and
Maatschappij tot voortzetting van de zaken der Firma Willem van Rijn, 13/61, EU:C:1962:11
63Judgment of 30 January 1974, Belgische Radio en Televisie and société belge des auteurs, compositeurs
et éditeurs v SV SABAM and NV Fonior, 127/73, EU:C:1974:6
64 Judgment of 20 September 2001, Courage Ltd v Bernard Crehan and Bernard Crehan v Courage Ltd
and Others, C-453/99, EU:C:2001:465
65 Canenbley, Cornelis, Steinvorth, Till, Effective enforcement of competition law: is there a solution to
the conflict between leniency programmes and private damages actions?, Journal of European
Competition Law & Practice 2011, 2 (4): 315-326, pp. 317-318
66 Canenbley, Cornelis, Steinvorth, Till, Effective enforcement of competition law: is there a solution to
the conflict between leniency programmes and private damages actions?, Journal of European
Competition Law & Practice 2011, 2 (4): 315-326, pp. 317-318
67 Enshrined in Judgment of 15 May 1986, Marguerite Johnston v Chief Constable of the Royal Ulster
Constabulary, 222/84, EU:C:1986:206; Judgment of 14 December 1995, Peterbroeck, Van Campenhout & Cie SCS v Belgian State, C-312/93, EU:C:1995:437; Judgment of 15 May 1986, Marguerite Johnston v Chief Constable of the Royal Ulster Constabulary, 222/84, EU:C:1986:206; Judgment of 14 December
22
judgment68, the Court of Justice confirmed the Courage ruling. This was a follow-on
damages case, brought after findings of the Italian competition authority that an agreement between automotive insurers infringed the competition rules, due to unlawful exchange of information. The ruling explained the types of recoverable damages, which are actual loss and lost profits, plus interest, in order to ensure that the victims were given the real value of the loss they suffered, so that they were able to be compensated. It also made clear that, according to the principle of equivalence, if it was possible to award certain types of damages in domestic actions similar to actions based on a breach of EU competition law, it must have also been possible to award such damages in the latter damages actions. Hence, Manfredi made clear that the EU could theoretically
adopt legislation permitting punitive damages.69 According to paragraph 99 of the
Manfredi ruling:
“Therefore, first, in accordance with the principle of equivalence, if it is possible to
award specific damages, such as exemplary or punitive damages, in domestic actions similar to actions founded on the Community competition rules, it must also be possible to award such damages in actions founded on Community rules. However, Community law does not prevent national courts from taking steps to ensure that the protection of the rights guaranteed by Community law does not entail the unjust enrichment of those who enjoy them.”
Furthermore, Pfleiderer70 recognized that there was a problem of balancing between
judicial protection and effective enforcement. On the one hand, public enforcement was, and still is, more important, and most private actions (follow-on) depend on it. On the other hand, parties’ access to information is essential, so Member States have to decide where the perfect balance lies, on a case by case analysis, according to national law, while respecting the principles of equivalence and effectiveness. Problems of lack of
1995, Peterbroeck, Van Campenhout & Cie SCS v Belgian State, C-312/93, EU:C:1995:437; Judgment of 14 December 1995, Jeroen van Schijndel and Johannes Nicolaas Cornelis van Veen v Stichting
Pensioenfonds voor Fysiotherapeuten; Judgment of 17 July 1997, GT-Link A/S v De Danske Statsbaner (DSB), C-242/95, EU:C:1997:376; Judgment of 7 March 1985, Van Gend & Loos NV v Inspecteur der Invoerrechten en Accijnzen, Enschede, 32/84, EU:C:1985:104; Judgment of 9 November 1995, Andrea Francovich v Italian Republic, C-479/93, EU:C:1995:372; and Judgment of 5 March 1996, Brasserie du Pêcheur SA v Bundesrepublik Deutschland and The Queen v Secretary of State for Transport, ex parte: Factortame Ltd and others, Joined cases C-46/93 and C-48/93, EU:C:1996:79
68 Judgment of 13 July 2006, Vincenzo Manfredi v Lloyd Adriatico Assicurazioni SpA, C-295/04, Antonio
Cannito v Fondiaria Sai SpA, C-296/04, Nicolò Tricarico v Assitalia SpA, C-297/04; and Pasqualina Murgolo, C-298/04 v Assitalia SpA, EU:C:2006:461
69 http://ec.europa.eu/competition/speeches/text/2006_3_23_en.pdf
23
legal certainty derive from this difficult conciliation. Afterwards, Donau Chemie71 and
Kone72 confirmed the “Pfleiderer balancing test”, although EnBW73 narrowed this
idea.7475
In 2004, the Commission carried out the Ashurst report 76, a study on the possibilities
and limitations of damages claims related to competition law in the Member States. The conclusion was that the regimes were considerably diverse amongst the countries and were in need of harmonization. Most were (and still are) quite underdeveloped, as we will see.
Later that year, damages actions were finally specifically addressed in the 2005 Green
Paper on damages actions for breach of the EC antitrust rules, in which compensation
and deterrence goals of private enforcement were given the same importance. Before the Green Paper was published, there was a discussion on whether or not to use the American system as an inspiration and introduce double damages to increase victims’ incentives to sue, but the feedback was very negative, so the European Commission
abandoned this idea.77 78The possibility of punitive damages and their extent remained
open to the Member States’ criteria, with certain boundaries: respect of the principles of
equivalence and effectiveness79.
In 2008, the Commission published the White Paper on Damages Actions for Breach of
the EC Antitrust Rules80, the basis of the Damages Directive. It definitely moved away
71 Judgment of 6 June 2013, Bundeswettbewerbsbehörde v Donau Chemie AG and Others, C-536/11,
EU:C:2013:366
72 Judgment of 5 June 2014, Kone AG and Others v ÖBB-Infrastruktur AG, C-557/12, EU:C:2014:1317
73 Judgment of 27 February 2014, European Commission v EnBW Energie Baden-Württemberg AG,
C‑365/12 P, EU:C:2014:112
74 Balasingham, Baskaran, 15 years after Courage v. Crehan: the right to damages under EU competition
law, European Competition and Regulatory Law Review, 2017, pp.11-25
75 Subsequently, Regulation 1/2003 was published, encompassing an obligation for national courts to apply EU competition law and introducing rules regulating the relationship between public and private enforcement
76 Study on the conditions of claims for damages in case of infringement of EC competition rules, Comparative Report, prepared by Denis Waelbroeck, Donald Slater and Gil Even-Shoshan, 31 August 2004
77 Wouter P.J. Wils, Private enforcement of EU antitrust law and its relationship with public
enforcement: past, present and future, pp. 21-23
78 Also in 2005, there was a Green Paper on consumer collective redress, COM(2008) 794 final, of 27
November 2008
79 See article 2(2) of the Damages Directive
80 White paper on damages actions for breach of the EC antitrust rules, {SEC(2008) 404} {SEC(2008)
24 from the US method, and affirmed the single damages compensation approach. Moreover, aggregation claims were (and are) seen as essential for victims, leading to the proposal of 2 mechanisms that, to some extent, have the same goal of punitive damages, which is to provide the necessary incentives for victims of competition infringements to claim the damages they suffered. These mechanisms are representative actions and opt-in collective actions. The former are brought by qualified entities, such as consumer associations, state bodies, or trade associations, on behalf of identified or identifiable victims (in rather restricted cases), whereas in the latter, victims actively have to expressly decide to combine their individual claims for the harm they suffered into one single action (opt-in). In the US, this mechanism also exists, but with an opt-out method, whereby plaintiffs who suffered damages are considered automatically part of a class action, unless they actively decide against it.
On 25 December 2014, the Damages Directive finally entered into force. Collective
redress was addressed separately, in a Commission recommendation81. The Damages
Directive aims to improve restitutionary justice, but it only has mandatory application
when there is some effect on trade between the Member States. If only national competition law applies, Member States are free to choose whether or not to apply it. Broad application is likely to happen though, as it makes procedures easier and equal,
but there is still legal uncertainty.82 Moreover, European authorities aren’t the only
institutions responsible for the enforcement of articles 101 and 102 TFEU; Member States’ institutions share this administrative power.
Regarding complementarity of public and private enforcement, the Damages Directive strengthens private enforcement at Member States’ level to secure full compensation and the acquis communautaire, but makes deterrence secondary. Its regime, in particular regarding punitive damages will be further developed in section 4.3.
81 Commission Recommendation on common principles for injunctive and compensatory collective
redress mechanisms in the Member States concerning violations of rights granted under Union Law, of
11 June 2013
82 Milutinović, Veljko, The antitrust damages directive: the ideal of just compensation and the primacy of
25
4.2. Examples of some Member States’ regimes
EU Member States still have very different private enforcement systems. What they do have in common is that the majority prefers other types of incentives for victims to seek damages, rather than punitive damages. That was one of the key reasons that led the European legislators, while drafting the Damages Directive, to vehemently prohibit overcompensation, as they knew Member States would not easily approve that.
The Ashurst report identified 159 competition law proceedings between 1999 and 2004, 119 of which led to a court decision. Damages were only awarded in nine cases, with six of these only declaring the obligation to pay damages without determining the amount. Nevertheless, these numbers’ accuracy is contested by some authors and many years have passed now, so perhaps the scenario has slightly improved.
Regarding punitive damages, there are some exceptional Member States that already allow overcompensation schemes, as we will see, and that could be a sign of possible change in the future.
Germany83, Italy84, France85, and especially the United Kingdom86, were the first
Member States to award damages for breach of competition rules. They are the most
developed in the subject of private enforcement and act as hubs. 87 The Netherlands also
has a quite developed regime and collective actions for damages are now recognized in Sweden, Finland and Denmark.
83 Judgment of the Berlin Landgericht of 27 June 2003, Max Boegl Bauunternehmung v. Hanson
Germany; Judgment of the Dortmund Landgericht of 1 April 2004, Vitaminkartell III, (WuW 2004, 1182)
84 Corte d'Appello di Milano, 18 July 1995, Telsystem S.p.A. vs. SIP S.p.A. in Foro It., 1996, I, 276; Judgments of the Giudici di Pace following the Decision of the Autorita garante della concorrenza e del
mercato (AGCM) No. 8546, of 28 July 2000; Corte d'Appello di Roma [2003] Albacom v Telecom Italia,
Foro Italiano [2003] 2474; Corte d'Appello di Milano, decision of 11 July 2003, Bluvacanze
85 Judgment of the Cour de Cassation, Commercial Division of 1 March 1982, Syndicat des expediteurs
et exportateurs; Judgment of the Paris Commercial Tribunal of 3 June 1992, Mors v. Labinal and Westland Aerospace; Judgment of the Paris Court of Appeal of 22 October 1996, Peugeot/ Ecosystem;
Judgment of the Cour de Cassation, Commercial Division of 14 February 1995; Judgment of the Paris Court of Appeal of 13 January 1998, UGAP v. SA CAMIF, JCP G 1998, II-10217; and Judgment of the Paris Court of Appeal of 22 October 2001
86 Judgment of 6 May 2003, Provimi and Nutreco v. Aventis and others, 2003 EWHC 961 (COMM);
Crehan v Inntrepreneur [2007] EWHC 90081 (Costs)
87 Lourenço, Nuno Calaim, The European Commission directive on antitrust damages actions, in Revista
26 Regarding the specific case of Portugal, private enforcement case-law is still sparse, but
it’s slowly growing88. Punitive damages are not allowed, but interest is taken into
consideration. Class actions are available with an opt-in system, named “ação
popular”89. Portugal’s private enforcement is stepping up and trying to follow the footsteps of its European “big brothers”, but many challenges will have to be overcome, as these countries are still the preferable jurisdictions for plaintiffs.
In other countries, like the Czech Republic, Slovakia, Ireland and Italy, the jurisdiction regarding claims based on national competition laws belongs to courts higher than those normally adjudicating at first instance; in others, like Germany and Sweden, there are special panels for competition issues; yet in others, such as France and Spain, only some courts have jurisdiction to adjudicate in antitrust matters. Many times there is also uncertainty of jurisdiction, namely if there is both a breach of national and European competition law, which also acts as an impediment for effective justice and compensation.
When parties are from different nationalities or when the claimant uses forum shopping to get the most favorable regime, these issues become even more adamant. The general rule of the majority of the Member States is that of the domicile of the defendant, but there are various exceptions. In my view, the only solution to get past forum shopping and create better incentives for parties to sue in every Member State is to provide for similar regimes in all Member States and to strengthen cooperation with the EU institutions, namely the European Commission.
Collective redress can also be very useful in providing incentives for victims, as they can share legal costs. The Commission recommends that all Member States should make collective redress mechanisms available (but it’s not mandatory), preferring the opt-in and loser pays principles, as opposed to the US-style opt-out class actions. These last ones risk encouraging unmeritorious claims and abusive litigation tactics, in which the expected value for the plaintiff is much greater than the actual harm suffered,
leading to excessive litigation and a social and judicial burden.90
88 On the 20th April 2018, Portugal (finally) approved the Law that transposes the Damages Directive 89 As enshrined in article 19 of the Law that transposes the Damages Directive and Law 83/95 of 31st
August, altered by Decree Law 214-G/2015, of 20th October
90 Howard, Anneli, Too little, too late? The European Commission's legislative proposals on anti-trust
27 Another issue concerns costs. All Member States provide in their national legislations the rule that all costs can be recovered and that the loser pays the costs of the winner.
Some countries91, however, require the recovery to be reasonable and, as we have seen,
most do not allow contingency fees, albeit some of them do allow different types of enhancement of lawyers' fees, such as a bonus in case of win. These rules clearly create a disincentive for private plaintiffs to file suits. Thus, cases are generally brought in very few Member States and usually by large law firms.
Finally, regarding the prohibition of punitive damages at an EU level, although most Member States share this rule in their systems, there are a few who actually allow them. This entails a legal problem, inasmuch if some Member States’ legal orders recognize punitive damages, it can potentially lead to forum shopping, since claimants have better incentives to sue in these Member States. Namely, the 2004 Ashurst report revealed exemplary damages to be available in Cyprus (where any bad faith or negligence is taken into account when imposing punitive damages), the United Kingdom and Ireland, even though they were rarely awarded. For example, the UK Competition Appeal Tribunal awarded punitive damages in a follow-on damages case in 2012, in the 2
Travel v Cardiff Bus judgment.92 Cardiff Bus had previously been found to have abused its dominant position, leading 2 Travel to claim £50m in damages. The decision ended
up awarding it £33,818.79 in lost profits plus £60,000 in exemplary damages.93In 2016,
the UK’s Competition Appeal Tribunal awarded Sainsbury’s Supermarkets Ltd £68.6
million in damages, plus interest, following its successful claim against MasterCard.94
The civil systems, on the other hand, namely Germany, are generally against overcompensation, which usually occurs when there are excessive incentives to sue. They are based on the general principle of the balance of advantages, and restitutio in
integrum – including both damnum emergens and lucrum cessans – is a ceiling to
damage compensation. If interest is added, in particular prejudgment interest (which helps to reduce the dilution of the compensatory potential of the damages), then single
91 Finland, Hungary, Italy, Poland, Slovenia, Sweden and the United Kingdom
92 Judgment of 5 July 2012, Cardiff Bus, 1178/5/7/11
93
https://www.oxera.com/Oxera/media/Oxera/downloads/Agenda/The-2-Travel-v-Cardiff-Bus-ruling.pdf?ext=.pdf
94 Judgment of 14 July 2016, Sainsbury’s Supermarkets Ltd v MasterCard Incorporated and Others,
28 damages can eventually provide adequate restitution. The problem is, that is not always the case.
Nevertheless, lately, this “European ban” on punitive damages has been slightly overturned in some jurisdictions. Namely in Germany, where punitive damages have been awarded in some civil law disputes; in Spain, where the Spanish Supreme Court endorsed a US judgment awarding punitive damages, in Judgement of 13 November 2001, Miller Import Corp. v. Alabastres Alfredo, S.L, Tribunal Supremo, Exequatur no. 2039/1999, Aedipir 203, 914.; and even in Italy, where one very exceptional case of punitive damages was sentenced in the Judgment of 21 May 2007, G.d.p. Bitonto,
Manfredi v. Lloyd Adriatico Assicurazioni S.p.a., despite the strict refusal to apply US
treble damages, as they are considered contrary to the public order.95
95http://ec.europa.eu/competition/antitrust/actionsdamages/files_white_paper/impact_study.pdf#page=441
29
4.3. The Damages Directive’s approach
The right to an effective remedy is enshrined in article 19(1) TEU96; article 47(1) of the
Charter 97 ; and articles 2, 3(1), and 12 of the Damages Directive. Article 2(1) of the
Directive lays down the principle that any person must be able to obtain compensation.
The principles of equivalence and effectiveness make up a dual test that curbs the principle of national autonomy, even though causation and quantification of damages remain a matter of national law. Despite the fact that the EU defined the conditions for the existence of the right to claim damages, the exercise of this right is not defined at an EU level.
The Commission tried to address some obstacles to effective compensation for victims of competition law infringements, through several legislative measures, in various areas of law. Notwithstanding, an impediment of compensation is that claims are often spread over many victims, with usually negligible losses over a long period of time. So, victims don’t have enough incentives or resources to seek compensation. Collective redress is a possible solution for this problem, but it is very much dependent on the legal culture,
and it’s not mandatory,98 as there was only a Recommendation on collective redress99.
In a press release100 accompanying this Recommendation, it was further explained that
“(…) the European approach to collective redress clearly rejects the US style system of [opt out] “class actions”. Contingency fees and punitive damages were also
prohibited.101
Another issue, also important, albeit not at an a priori (from the claim) perspective, concerns the problem of how to quantify damages. This difficult task can, to some extent, also discourage potential claims from victims of competition infringements, as they know the harm they suffered will be extremely hard to quantify in court.
96 Treaty of the European Union
97 Charter of fundamental rights of the European Union (2000/c 364/01)
98 Hjelmeng, Erling, Competition law remedies: striving for coherence or finding new ways?, Common
Market Law Review 50: 1007–1038, 2013, p.1027
99 Commission Recommendation on common principles for injunctive and compensatory collective
redress mechanisms in the Member States concerning violations of rights granted under Union Law, of
11 June 2013
100 European Commission’s press release of 11 June 2013: “Commission recommends Member States to
have collective redress mechanisms in place to ensure effective access to justice”.
101 Wouter P.J. Wils, Private enforcement of EU antitrust law and its relationship with public
